But Joris Brahms, MD, C&C Group, international division, told investors and analysts at the company’s full-year 2013 results presentation yesterday that the firm’s US team - C&C is a major US cider player - was “fired up” and ready to fight back.
Ireland and UK-based C&C reported net revenue up 30% to €620.2m ($848m) for fiscal year 2014 with adjusted operating profit up 10.6% to €126.7m; international pre-tax earnings rose 68.4% to €16m, but US cider volumes slumped.
Brahms told his audience: “The market is still obviously showing spectacular growth, close to 100% in the latest period…driven by the new market leader.” IRI US mult-outlet data ending February 16 2014 shows that Angry Orchard remains the US No.1.
“If you take away that market leader then the market would be up around 20-30% year-on-year. We have not participated in that growth, our main brand, Woodchuck, has gone backwards, 2% on shipments and on depletions a bit more, minus 6%,” Brahms said, while west coast US brand Hornsby’s fell circa. 30%.
'How can you reassure us the US cider market won't go the same way as the UK?': Analyst
Andrew Holland, an analyst at Societie Generale, asked Brahms if there was any sign of an improvement in performance after “huge disruption last year” as C&C struggled to integrate $305m purchase Vermont Hard Cider Company (with top brand Woodchuck) from late 2012, build a wholesale network and a new cidery.
“Can you give us any reassurance that underlying, your cider business in the US is showing improvement?” Holland asked.
C&C's pre-tax UK cider earnings fell 29.1% to €20.7m in 2013/14, with slowing growth particularly problematic for the company - a first mover credited with sparking the nation's cider renaissance with its Magners brand over the past decade - that now faces competition from the likes of Carlsberg (Somersby) and AB InBev (Stella Cidre) in a "commoditized and challenging" British market.
“How can you reassure us that it’s not going to go the same way as the UK cider market, where as you observe [in the US] all the big guys have got in, and you’re now facing Jonny Appleseed?” Holland added.
Jonny (Appleseed) come lately, but ABI has distribution and marketing muscle
Jonny Appleseed Hard Cider is an AB InBev brand launched on April 7 (see picture below) that Brahms classifies as a ‘commercial cider’ – where he told analysts he sees the US cider market segmenting naturally into such offerings, craft ciders (produced by the likes of C&C Group) and small-batch orchard ciders.